PLEDGING SECURITIES HELD THROUGH EUROCLEAR OR CLEARSTREAM TO THE FEDERAL RESERVE BANK OF NEW YORK

____________________________________________________ Contents I. II. III. IV. Introduction Comparison of Pledging Arrangements Preliminary Legal and Documentation Requirements Pledging Procedures

Exhibit A Eligible Securities Criteria ____________________________________________________

I.

INTRODUCTION

A depository institution ("DI") that has signed Operating Circular No. 10 may be able to pledge securities it holds through Euroclear or Clearstream to the Federal Reserve Bank of New York (FRBNY) as discount window collateral. Under these pledging arrangements, a pledged account is established in the name of FRBNY to hold collateral pledged to it by the pledging DI. The pledging DI may only deposit and withdraw securities from this pledged account in accordance with the procedures generally explained in this document1 and subject to the approval of FRBNY. The pledging DI should note that: (1) The pledged account must be administered by the New York office of the DI (or such other U.S. office of the DI that has signed Operating Circular No. 10). This means, for instance, that any deposit or withdrawal applications in respect of the pledged account must be signed by individuals listed on the signature card for pledging submitted by the New York office of the DI (or such other U.S. office of the DI that has signed Operating Circular No. 10). This is not a repo or repo-like facility. Securities will be pledged (transferred to the pledged account) free of payment. Any lending against the securities in the pledged account is entirely at FRBNYs discretion and will be undertaken only under Operating Circular No 10.

(2)

This document offers an overview of key features of the Euroclear and Clearstream pledging arrangements, outlines the legal and documentation requirements for establishing each pledging arrangement, and explains the process for effecting pledges through each pledging arrangement.

Withdrawal and deposit rights and procedures are more specifically explained in the agreements governing the pledging arrangements and in the applicable operating procedures of Euroclear and Clearstream.

II.

KEY FEATURES OF PLEDGING ARRANGEMENTS

Below is a chart outlining key features of the Euroclear and Clearstream pledging arrangements: Feature Eligible Securities Euroclear/Clearstream Pledging Arrangement Subject to change at FRBNYs discretion. Currently, only securities meeting the general eligibility criteria listed in Exhibit A are eligible for pledging through Euroclear/Clearstream. The eligibility criteria will be specified precisely in the agreements documenting the arrangements. The pledging DI is responsible for all costs and fees associated with the Euroclear/Clearstream pledging arrangement.

Responsibility for Fees and Other Costs Deposits of collateral

There is no need for the pledging DI to deal with FRBNY when depositing collateral. Euroclear/Clearstream will act on the pledging DIs deposit instruction after verifying the collateral eligibility based on criteria pre-determined by FRBNY. Euroclear/Clearstream requires FRBNY approval unless securities of equal or like value are being simultaneously substituted for the withdrawn securitiessee the following row. There is no need for the pledging DI to deal with FRBNY to substitute a pledged security with another eligible security of equal or greater value. Euroclear/Clearstream will act on the pledging DIs substitution instruction after verifying this requirement. Unless otherwise instructed by FRBNY, Euroclear/Clearstream will transfer income received in respect of a pledged security to the pledging DI. Unless otherwise instructed by FRBNY, Euroclear/Clearstream will transfer redemption proceeds received in respect of a pledged security to the pledging DI.

Withdrawals of collateral

Substitution of collateral

Income payments

Redemption proceeds III.

PRELIMINARY LEGAL AND DOCUMENTATION REQUIREMENTS

Prior to establishing either pledging arrangement, a DI will need to show, to FRBNYs satisfaction, that it can provide FRBNY with a legally enforceable security interest in the pledged securities. This may require that a DI provide FRBNY with a legal opinion from counsel satisfactory to FRBNY. It will also require execution by all relevant parties of the necessary pledging agreements, the forms of which have already been negotiated by FRBNY, Euroclear and Clearstream. A DI THAT IS INTERESTED IN ESTABLISHING EITHER PLEDGING ARRANGEMENT SHOULD CONTACT ITS DISCOUNT WINDOW ANALYST OR THE DISCOUNT WINDOW HOTLINE (866-226-5619), FOR THE FORMS AND NECESSARY DOCUMENTATION FOR THESE PLEDGING ARRANGEMENTS. THE DISCOUNT WINDOW STAFF WILL ARRANGE FOR FURTHER DISCUSSIONS REGARDING THE LEGAL AND DOCUMENTATION REQUIREMENTS WITH THE DI AND FRBNYS LEGAL GROUP.

IV.

PLEDGING MECHANICS A. EUROCLEAR 1. Deposit Procedures A. The pledging DI should follow Euroclears deposit procedures. Euroclear will screen the proposed collateral against eligibility criteria pre-determined by FRBNY pursuant to the agreement among Euroclear, FRBNY and the pledging DI.

2.

Withdrawal Procedures2 A. The pledging DI must fax a completed Euroclear Withdrawal Application to FRBNY by 9:00 am EST. It is important to include the Euroclear Transaction ID number and the remaining balance of that particular transaction after the withdrawal. FRBNY will ensure the Euroclear Withdrawal Application is from an authorized source. FRBNY will process the withdrawal request3 and will prepare a price adjustment or account closing for the specified transaction ID. Euroclear will effect the transfer of securities back to the pledging bank. Around 1:30 pm EST, FRBNY will extract the final file with the current days activity from Euroclears Triweb website.

B. C. D. E.

B.

CLEARSTREAM 1. Deposit Procedures A. The pledging DI should follow Clearstreams deposit procedures. Clearstream will screen the proposed collateral against eligibility criteria pre-determined by FRBNY pursuant to the agreement among Clearstream, FRBNY, and the pledging DI.

2.

Withdrawal Procedures4 A. B. C. D. The pledging DI must notify Clearstream before 12:00 pm EST with any withdrawal requests for same-day settlement. Clearstream notifies the FRBNY by email or phone with the amount of the withdrawal request FRBNY will advise Clearstream by email or phone if the withdrawal request is approved.5 Clearstream will effect the transfer of securities back to the pledging bank.

A pledging DI needs to follow these withdrawal procedures only if the pledging DI is not making a simultaneous substitute deposit of collateral having at least the same value as the withdrawn collateral. Euroclear will permit such requested substitutions without involving FRBNY. 3 Note that FRBNY will not permit withdrawals if the withdrawal amount exceeds the amount of outstanding Discount Window loans an institution may have. 4 A pledging DI needs to follow these withdrawal procedures only if the pledging DI is not making a simultaneous substitute deposit of collateral having at least the same value as the withdrawn collateral. Clearstream will permit such requested substitutions without involving FRBNY. 5 Note that FRBNY will not permit withdrawals if the withdrawal amount exceeds the amount of outstanding Discount Window loans an institution may have.

E.

After the transfer is completed (usually between 12:00 pm and 1:00 pm EST), Clearstream will send a final file via email with the current days activity to the FRBNY.

EXHIBIT A Eligible Securities Criteria (As of March 3, 2008) A security is eligible for pledging through the Euroclear or Clearstream pledging arrangement if it meets all of the following conditions: 1. 2. The security is eligible for clearing and settlement in the applicable system (Euroclear or Clearstream). The security is a Brady Bond, Foreign Government Debt (Sovereign Debt), German Jumbo Pfandbriefe, International Agency Debt, Foreign Government Agency Debt, Municipal Bonds, and Corporate Bonds. The security meets the following credit rating criteria:

3.

Criteria for (1) Brady Bonds, (2) Foreign Government Debt (Sovereign Debt) and (3) U.S. DollarDenominated International Agency Debt, Foreign Government Agency Debt, Municipal Bonds and Corporate Bonds: S&P AAA through BBBFitch IBCA AAA through BBBDuff & Phelps AAA through BBBMoodys Aaa through Baa3 Thomspon AAA through BBB Criteria for (1) German Jumbo Pfandbreife and (2) Non-U.S. Dollar-Denominated International Agency Debt, Foreign Government Agency Debt, Municipal Bonds and Corporate Bonds: S&P Only AAA Fitch IBCA Only AAA Duff & Phelps Only AAA Moodys Only Aaa Thomspon Only AAA If an asset is rated by more than one rating agency, the lowest rating is used to determine eligibility. 4. The security is denominated in one of the following currencies: U.S. Dollar Canadian Dollar British Pound Danish Krone Euro Australian Dollar Swiss Franc Japanese Yen Swedish Krone

If a security is non-U.S. Dollar denominated, it will not be eligible unless it has a market price from a recognized pricing source.

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THESE ELIGIBILITY CRITERIA ARE SUBJECT TO CHANGE AT THE DISCRETION OF FRBNY. PLEASE CONTACT YOUR DISCOUNT WINDOW ANALYST OR THE DISCOUNT WINDOW HOTLINE (866-226-5619) FOR THE LATEST ELIGIBILITY CRITERIA.